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Mortgages for Houses in Multiple Occupation (HMOs)

Advocate Explains:
Houses in Multiple Occupation (HMO)

House in Multiple Occupation (HMO) explained:
HMO mortgages and lenders are available depends on the size (number of rooms), the licensing requirements and the planning permission (C4 residential or Sui generis).

On top of the type and size of HMO, the lenders and mortgage products available depends on the applicant’s experience as a landlord.

What is a House in Multiple Occupation (HMO) property? Houses in Multiple Occupation (HMOs) are properties where two or more households share a house and its facilities such as a kitchen, bathroom and toilet.

Key Features: HMO Mortgages
  • Typical interest rates and fees – Call our advisers
  • HMO Mortgages from £100,000 to £50 million; subject to affordability and credit criteria
  • Loan to values up to 75% (100% with cross charges)
  • Loan to values below 50% could be eligible for standard BTL mortgages, thereby benefitting from lower interest rates
  • Mortgage Term: 1 to 30 years
  • Payments: interest only / capital repayment / part capital / interest compounded / rolled or retained (no montly payments)
  • Purchase / Refinancing / Capital Raising (any purpose)
  • No minimum outside income / All income types
  • No max of number of rooms / units
  • No max of number of tenancies
  • All credit histories: High Net Worth to Credit Repair
  • All applicant types: Individuals / Corporate (Ltd Co’s) / SSAS etc
  • All tenures: Freehold / Leasehold (no minimum term)
  • All residential tenants: Working, Students, LHA benefits
  • All residential tenancies: AST to Corporate Leases
  • All business tenants: No restrictions on industry/sector
  • All business tenancies: Fully repairing leases / Licences
  • EPC-enhanced products available

It is important to know that Councils may change HMO criteria

You will see in the definitions above that the main criteria are the number of tenants and the number of floors in the property.
It is important to know that although the above definitions are correct, each Council has the authority to change them. We have come across a council in the past, that requires HMO licenses for properties with as few as 3 tenants and only 2 floors.

You can now gain access to the best solutions in the market

We are experts in arranging mortgages for Houses in Multiple Occupation that require a licence. We have a choice of 7 HMO mortgage lenders that are very active in providing HMO finance.

The choice of having 7 HMO mortgage lenders allows us to arrange HMO mortgages from 3 rooms up to an unlimited number of rooms. And at least 4 of these lenders are on restricted panels, therefore only selected brokers have access to them.


The typical fees are

  1. The lender’s arrangement fee is typically 1.95% – 2.00% of the loan amount. This fee is added to the loan.
  2. Valuations fees – This is the fee a surveyor charges to value the properties for the Bank. This can range from £150 but increases as the value of the property increases. In some cases, an automatic valuation or desktop valuation can be used which is free of charge.
  3. Solicitors fees – You will need to pay the fees for your solicitor to undertake the conveyance and also the lender’s solicitors fees for the security documentation.

A bespoke illustration will be provided for your individual circumstances to provide clarity on all fees and charges prior to commencing the process. This is free of charge

Typically, HMO mortgages require a deposit ranging from 15% to 35% of the property’s value.

NOTE: The lower the deposit, the higher the interest rate will be. If you’re looking for a lower interest rate, a higher deposit will be required.

The interest rates depend on the amount of the loan and the loan to value (LTV) being requested.

The loan to value represents the risk to the lender; the lower this is, the lower the interest rates. 

Some HMOs will require planning permission, depending on the size and number of tenants.

There are certain checks and rules that need to be kept in mind with HMOs. A few to state are:

  • Ensuring there is sufficient space for all tenants.
  • Annual safety checks/assessments.
  • Is there adequate waste bins for the amount of tenants.
  • Maintain good repair.

Our advisers offer a free consultation, so please give us a call or use the “Get in Touch With Us” form at the end of this page

Advantages of HMO Investing

  • Operating a HMO brings benefits in terms of higher rental yields and income.
  • 100% HMO mortgages with an additional mortgage. 80% HMO mortgages as stand-alone mortgages.
  • Access to lenders who will lend when the HMO be let on one AST (assured short tenancy agreement), which is typical of student lets or multiple AST’s (we have access to lenders who have no maximum limit on the number of  AST’s)
  • All HMO licencing and planning classifications considered
  • All HMO configurations (multiple kitchens, kitchenettes and bathrooms)

Disadvantages of HMO Investing

  • Not all properties can be converted into a HMO.
  • Less lenders that offer financing for this type of property.

How can YOU benefit from our advice?

  • If speed is essential to the transaction, our advisers will prioritise your case to ensure deadlines are met.
  • With access to both the buy-to-let HMO mortgage lenders as well as the HMO commercial mortgage lenders, we can provide you with the widest range of products currently available in the market. We can assist if you are a first-time HMO landlord or a professional landlord.
  • HMOs are not to be confused with bedsits. Bedsit properties rented rooms in houses that share a bathroom with other tenants but have their own kitchen facilities – Our Advisers can help to explain this.
  • We offer a FREE assessment and have a no upfront fee policy. Our typical fee for 99% of our clients is capped at £395
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